As we approach the end of the current earnings season, many investors would be keeping an eye out for how listed Singapore companies are performing, given the macroeconomic headwinds such as high inflation and recessionary pressures.
In fact, just last week, Singapore’s Ministry of Trade and Industry narrowed our gross domestic product (GDP) growth forecast for the year to 3% to 4%, from 3% to 5% previously, after considering the latest global and domestic economic developments.
During his May Day Rally speech, our prime minister Lee Hsien Loong even predicted that there may be a recession coming in the next year or two.
He mentioned then:
“But we must be prepared for more economic challenges in the year ahead. Inflation will remain high. Central banks in the developed countries are tightening their monetary policies, raising interest rates. Global growth will be weaker, and there may be a recession within the next two years.”
Despite all the doom and gloom, some Singapore companies have reported a higher dividend payout for their latest earnings period. A company that can increase its dividend payout is signalling to the market that it has a strong business and a positive outlook.
In this week’s edition of 4 Stocks This Week, we take a look at four Singapore companies that managed to raise their dividends despite the macroeconomic headwinds.
ComfortDelGro Corporation Ltd (SGX: C52)
A household name in Singapore, ComfortDelGro (SGX: C52) is one of the largest land transport outfits in the world, with operations in several countries including Australia, United Kingdom, China and of course, Singapore.
The company declared an interim dividend of 2.85 Singapore cents (increasing by 36% year-on-year) and a special dividend of 1.41 Singapore cents for the first half of 2022, marking the first time since 2007 that a special dividend has been declared. The special dividend is due to a net gain on a property sale in London (more on it later).
Exactly a year ago, ComfortDelGro paid out a lower interim dividend of 2.10 Singapore cents.
Source: ComfortDelGro 1H2022 earnings presentation
ComfortDelGro’s revenue for the first six months of 2022 grew 6.7% year-on-year to S$1.86 billion as the pandemic restrictions were relaxed in most countries that it operates in, except China.
Mainly due to a one-off gain of S$30.5 million from the sale of the London Alperton property, ComfortDelGro’s net profit increased by 30.4% to S$118.7 million. Excluding the one-time gain, its net profit would have been S$88.2 million, down from S$91 million last year.
Lim Jit Poh, ComfortDelGro’s chairman, explained the rationale for the company’s latest bumper dividend payment:
“The Group is in a fortunate position to have a strong cash flow and be in a net cash position. As such, we do not have any problem funding our dividend payouts internally. With the exceptional gain from the sale of the Alperton property in London, we have decided to pass on the net gain from that sale to our Shareholders. This is something we will continue to do going forward when we make extraordinary gains and have no urgent need of the proceeds.”
At ComfortDelGro’s share price of S$1.48, it had a price-to-earnings (P/E) ratio of around 20x and a dividend yield of 3.3% (excluding the one-off special dividend).
Nordic Group Ltd (SGX: MR7)
Nordic (SGX: MR7) is involved in providing system integration solutions, vessel maintenance, scaffolding and insulation services, and precision engineering, among others.
For Nordic’s six-month period ended 30 June 2022, revenue surged 62% year-on-year to S$79.8 million as both its business segments of Project Services (PS) and Maintenance Services (MS) performed well due to the easing of movement restrictions worldwide.
Revenue from PS more than doubled to S$50.9 million, while revenue from MS grew 13% to S$28.9 million.
Source: Nordic Group 1H2022 press release
With the increase in revenue, Nordic’s net profit rose 49% year-on-year to S$11.6 million for the latest period.
The engineering company rewarded shareholders with increasing dividends for the first half of 2022. It declared an interim dividend of 1.162 Singapore cents per share for the latest period, up some 19% from 0.980 cents per share a year ago.
At Nordic Group’s share price of S$0.43, it has a P/E ratio of 9x and a dividend yield of 4.1%.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong (SGX: OV8) is a Singapore-grown supermarket chain with 66 outlets in our country. The company has also expanded into China to grow its business further.
For Sheng Siong’s first half of 2022, revenue dipped 0.7% year-on-year to S$676.8 million as COVID-19 measures were lifted earlier this year. The company explained that the easing “led to increased outdoor dining and overseas travel, especially during the June school holidays, which in turn returned sales revenue to more normalised pre-pandemic levels”.
However, despite the lower revenue, Sheng Siong’s net profit rose 2.1% to S$67.5 million for 2022 first-half. This resulted in its net profit margin improving from 9.7% to 10%.
The company has maintained its practice of paying stable dividends. For the latest period, Sheng Siong’s interim dividend per share increased to 3.15 Singapore cents, up 1.6% from 3.10 Singapore cents last year.
Sheng Siong shares are trading at S$1.63 each at the time of writing, translating to a P/E ratio of 18x and a dividend yield of 3.9%.
VICOM Limited (SGX: WJP)
Car owners in Singapore will be familiar with VICOM (SGX: WJP), a provider of technical testing and inspection services largely in Singapore. The company is also majority owned by ComfortDelGro.
For VICOM’s half year ended 30 June 2022, revenue grew 8.5% year-on-year to S$53.3 million as demand for its services moved in tandem with the improving Singapore economy.
As a result, VICOM’s net profit increased by 9.2% to $13.1 million. The company declared an interim dividend of 3.32 Singapore cents per share, up 9% from 3.04 cents last year.
At VICOM’s share price of S$2.07, it has a P/E ratio of around 30x and a dividend yield of 3.2%.
This article was written by Sudhan P, an investment analyst who is an avid investor of businesses listed on the stock market for over a decade now and is a huge advocate of investor education.
The post 4 Companies That Raised Dividends Despite Recession Worries: ComfortDelGro; Nordic; Sheng Siong; Vicom appeared first on DollarsAndSense.sg.
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